A number of crises are taking place at the same time making it complicated for pension funds, which should expect further changes to asset prices, Torben Moger Pedersen outgoing CEO of PensionDanmark, Copenhagen, told Pensions&Investments in an interview.
"Assets have repriced, and I don't think we are done," Mr. Pedersen said.
The return of high interest rates and prospect of relatively higher rates means a number of asset classes such as equity, real estate and infrastructure could still be impacted as companies have had to shorten supply chains due to military conflicts.
"A number of crises are taking place at the same time which makes it a complicated environment for all kinds of companies including us," he said.
Mr. Pedersen will step down Oct. 1, but he said the pension fund, which has €40 billion ($44 billion) in assets, will name its next leader in May.
As innovation plays a big role in Denmark, not only as a matter of investment policy, Mr. Pedersen said he hopes his successor maintains the same spirit of entrepreneurship.
Mr. Pedersen — also PensionDanmark's founder and only CEO to date — said the pension fund has new objectives in the current environment. While similar to other organizations it is dealing with the impact of inflation on its investments, it is staying committed to private markets.
The pension fund will maintain its allocations to real estate and infrastructure at 10% to 11% each but will focus on different opportunities.
"There will be a 'before' and 'after' 2022," he said, noting it was a remarkable year.
"We see a number of projects that were investible a few years ago are no longer investible," he added. The pension fund will cease to invest in brownfield infrastructure, for example.
But he said, "I think equity and real estate and infrastructure are a good inflation hedge."
The pension fund will focus on sourcing new green power offshore facilities in Europe, the U.S. and Asia. Mr. Pedersen noted that one opportunity will stem from the fact that leaders of North Sea countries gathered this week at a summit and pledged to increase offshore wind energy capacity.
Mr. Pedersen thinks the opportunities in real estate and infrastructure are still available, but pension funds need to get to them early to access a premium at a stage of asset development.
Considering the ongoing conflicts that are influencing the state of the global economy, Mr. Pedersen said the pension fund is also going to look for equity and real estate investments in the defense industry, including private public partnerships to support Denmark's defense as well as investing in companies that supply equipment, for example planes.
